The Group of Ministers (GoM) headed by The Finance Minister of India P. Chidambaram on 12 September 2013 decided to refund 11000 crore Rupees to BSNL and MTNL, the two state-run players, for returning Broadband Wireless Access (BWA) spectrum.
The GoM, also took a decision on providing pension to MTNL employees, which is likely to cost about 570 crore Rupees a year. With regard to the pension liability of MTNL staff, which will cost 570 crore Rupees annually, the state-run company will pay 170 crore Rupees while the rest will be paid by the Union Government of India.
Both the state-run players had requested the government to refund the amount they paid in 2010 for the BWA spectrum .BSNL had paid over 6500 crore Rupees and MTNL had paid about 4500 crore Rupees of BWA spectrum auction in 2010.
Factor behind losses:- The main reason for these companies running into losses was high wage costs. The employee cost as a percentage of revenue is over 103 percent for MTNL and 49 percent for BSNL compared to the industry average of about 5 percent.
MTNL’s net loss widened to 5321.12 crore Rupees in 2012-13 from 4109.78 crore Rupees in Financial Year 2011-12.
BSNL is expected to run up losses to the tune of 8198 crore Rupees in Financial Year 2011-12.
About Bharat Sanchar Nigam Ltd (BSNL)
Bharat Sanchar Nigam Ltd. was incorporated on 15 September 2000.The main objective of BSNL is to provide telecom services and network management in India. It is one of the largest and leading public sector units (PSU) providing comprehensive range of telecom services in India.
About Mahanagar Telephone Nigam Limited (MTNL)
Mahanagar Telephone Nigam Limited (MTNL) is a state-owned telecommunications service provider in the metro cities of Mumbai and New Delhi in India. MTNL was setup on 1 April 1986 by the Government of India.